Gov. Togiola signs $3 million interest free loan to LBJ

Lawmakers were told yesterday that Gov. Togiola Tulafono had signed the $3 million loan bill for the hospital, into law.

Togiola officially notified the Fono in a Feb. 16 letter that he had signed the bill and also executed, on behalf of ASG, a loan agreement with LBJ.

All fee increases that were effective Feb. 6, are now rolled back completely and will remain at pre-increase levels until the loan is repaid in full, Togiola wrote.

Under the terms of the $3 million loan agreement, there will be no furloughs at the hospital during the term of the interest free loan, “unless the government provides its express consent,” Togiola continued.

LBJ “is now required to develop and submit a ‘shortfall plan’ which will detail reasonable austerity measures in the event that such a fiscal underperformance recurs,” he explained. “The Medical Center will be required to work closely with my administration to monitor the financial vitality of the hospital, so that when fiscal infirmities arise they can be diagnosed quickly and treated effectively.”

The $3 million loan, funded from the Workmen’s Compensation Account, for LBJ Medical Center is to be repaid with a new 2% wage tax which will be added to the current 4% minimum income tax.

Once the loan is repaid, all revenues collected from the wage tax — to take effect this year — will go to fund the hospital's operations and off island medical referral program.

Togiola then urged lawmakers to consider and pass an administration proposal to provide further financing for the medical referral program.

The proposal, which is yet to be introduced in the Fono, appropriates $10 million for the referral program, to be funded with an increase for beer, alcohol, tobacco and cigarette excise taxes; a new $2,000 corporate tax; and a hike in fees for business license.

The governor did not refer to the delinquent hospital subsidy from ASG, that LBJ uses to pay the medicaid match nor was there a schedule of payments provided.